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Can a Ltd Company be a partner in a partnership?

Can a Ltd Company be a partner in a partnership?

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I have a client who currently derives income as a sole trader operating in a private capacity as a Consultant and is also a member of a partnership also providing Consultancy services. I am looking at incorporating such that the private income from the sole trader can flow into the Ltd Company but I was snot sure whether a partner of a partnership can be a Ltd Company such that the partnership share can also flow into the Ltd Company as well as the private income?   

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By Tax Dragon
05th Jun 2018 14:25

Quote:

I have a client....


Why do I find myself questioning that? The answer is yes, but beware of the tax consequences.
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By davebrown123
05th Jun 2018 14:51

Thanks for your response but I genuinely do have a client who is a NHS consultant who works privately and through a partnership. My concern is anti-avoidance legislation that effectively prevents this. Is this what you are referring to when you mention "beware of the tax consequences"?
Thank you for your help

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By Tax Dragon
05th Jun 2018 20:05

That's Peter's (view)point below; I was also thinking of the stuff Tim mentions (there's lots of points there but a couple of obvious ones include AIA and, if ever the partnership wanted to incorporate, it might struggle to use the s162 route if one of the partners was a company).

As an aside, I hope you or your client have considered the non-tax issues around incorporating his sole trade.

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By Tim Vane
05th Jun 2018 14:26

Yes a company can be a partner. This has various implications for the partnership, so the other partners may not wish to include a corporate member.

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By Peter Bromiley
05th Jun 2018 16:05

Generally, since December 2013, it hasn't really been worth making a limited company a Partner because the individual behind the company then pays income tax/NI on the partnership profits allocated to the limited company. It is as if the company is transparent for tax purposes.

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